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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 1018 & 1019/JP/2017
PER VIJAY PAL RAO, J.M.
These two appeals by the revenue are directed against two separate orders of ld. CIT (A) dated 24.10.2017 for the assessment years 2009-10 & 2010-11. The ground raised by the revenue is common for both the assessment years except quantum of disallowance. The ground raised by the revenue for the assessment year 2009-10 is as under :-
“ On the facts and circumstances of the case and in law ld. CIT (A) erred in reducing the disallowance of Rs. 11,23,241/- to Rs. 2,24,853/- made by AO On account of share loss computed in respect of a speculation business carried on by the assessee, without appreciating the material fact of the case.”
2 ITA Nos. 1018 & 1019/JP/2017 Shri Akhil Modi, Alwar.
The AO noted that the assessee has claimed loss on trading of shares
amounting to Rs. 11,23,241/-. The AO proposed to disallow the said claim of loss
on the ground that it is speculation loss which cannot be allowed against the other
income of the assessee. Accordingly, the AO made the disallowance of the said
amount of Rs. 11,23,241/- by considering the said speculative loss as per the
provisions of section 43(5) of the IT Act. The assessee challenged the action of the
AO before the ld. CIT (A). The ld. CIT (A) restricted the disallowance to
Rs.2,24,853/- and allowed the claim of the assessee of balance amount of Rs.
8,98,388/- by holding that the same is not speculative loss being incurred on F & O
transaction.
We have heard the ld. D/R as well as the ld. A/R of the assessee and
considered the relevant material on record. At the outset, we note that the AO has
made the disallowance of loss of Rs. 11,23,241/- by treating the same as speculative
loss under section 43(5) of the Act and by invoking the provisions of section 73 of
the Act. The AO has not examined the issue in the light of clause (d) and (c) of
proviso to section 43(5) of the Act whereby the trading and derivatives carried out in
a recognized stock exchange shall not be deemed to be a speculative transaction.
The ld. CIT (A) has considered this issue in para 6.3 and 6.3.2 as under :-
“ 6.3. I have considered the order passed by the A.O. and submissions filed by the appellant. Following facts have emerged;
That the appellant is in the business of share transaction also apart from deriving income from profession. 2. That during the year under consideration, the appellant has accumulated loss in share transaction to the tune of Rs. 11,23,241/-.
3 ITA Nos. 1018 & 1019/JP/2017 Shri Akhil Modi, Alwar.
That the AO has treated the entire loss of Rs. 11,23,241/- as speculative loss and therefore cannot be set off against business/profession head u/s 73 of the Act. 4. That the appellant has claimed that out of Rs. 11,23,241/- only the loss of Rs. 2,24,853/- comes under speculative transaction as the same was incurred during intra-day transaction and filed the copy of ledger in support of the claim. 5. That with regard to balance loss of Rs. 8,98,388/-, it was incurred during F & O transaction. 6. That the appellant has further cited the provision (c) of section 43(5) of the Act applicable from 01/04/2006 that such transaction shall not be deemed to be speculative transaction.
6.3.2. I have considered the above mentioned facts of the case. I find force in the argument of the AR that the share loss amounting to Rs. 8,98,388/- shall not be treated as speculative transaction as per the proviso to section 43(5) of the Act. Accordingly, the A.O. is directed to allow set off of Rs. 8,98,388/- against the business/profession head as per section 71 of the Act. However amount of Rs. 2,24,853/- shall be treated as speculative transaction as per section 43(5) and subjected to section 73 of the Act. Appellant’s ground of appeal, accordingly is partly allowed.”
Thus the ld. CIT (A) has given the finding that out of total loss of Rs. 11,23,241/-,
only the amount of Rs. 2,24,853/- comes under the speculative transaction and
cannot be set off against the business/professional income as per section 73 of the
Act. The revenue has not contradicted the factual finding given by the ld. CIT (A)
bifurcating the amount of loss arising from speculative transaction and F & O
transaction. Hence, in view of the facts and circumstances as discussed above, we
do not find any error or illegality in the order of the ld. CIT (A).
Though the ld. A/R of the assessee has raised an objection against the
maintainability of the appeals of the revenue due to low tax effect, however, we find
that as per the report of the AO, there was an audit objection on this issue. Accordingly as per para 3 of the CBDT Circular No. 5/2017 dated 23rd January, 2017
4 ITA Nos. 1018 & 1019/JP/2017 Shri Akhil Modi, Alwar. the issue involved in the revenue’s appeal is required to be adjudicated on merits and not on the ground of tax effect which is less than the monetary limit provided in the circular. Since we have upheld the impugned order of the ld. CIT (A), therefore, the objection raised by the ld. A/R is otherwise becomes infructuous. 4. In the result, appeals of the revenue are dismissed.
Order pronounced in the open court on 02/07/2018. Sd/- Sd/- ¼ HkkxpUn½ ¼ fot; iky jkWo ½ (BHAGCHAND) ( VIJAY PAL RAO ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 02/07/2018. das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant-The ACIT, circle-1, Alwar. 2. izR;FkhZ@ The Respondent-Shri Akhil Modi, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File {ITA No.1018 & 1019 /JP/2017} vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत